Platform Specialty Products Signs Definitive Agreement to Acquire Arysta for Approximately $3.51 Billion

Platform Specialty Products Corporation (NYSE:PAH) ("Platform"), a global specialty chemicals company, announced  that it has entered into a definitive agreement to acquire Arysta LifeScience Limited ("Arysta"), backed by the Permira funds for approximately $3.51 billion, subject to regulatory approval.

Arysta has reported net sales of $1.5 billion for the full year 2013 and regions such as Latin America, Africa, Central and Eastern Europe, China and South Asia represented over 65% of Arysta's sales in 2013. 

Arysta's President and Chief Executive Officer, Wayne Hewett, is expected to join Platform's senior leadership team as its President and to lead Platform's three agrochemical businesses i,e  Chemtura AgroSolutions ("CAS"), Agriphar, and Arysta.

The transaction, which is expected to close in the first quarter of 2015, is expected to be funded through a combination of cash on hand,  debt, and equity. The acquisition will not have any impact on Platform's status as a U.S.-domiciled company.

FMC Corporation Announces Agreement to Acquire Cheminova for $1.8 Billion

• Cheminova a Denmark-headquartered multinational crop protection company.
• Broadens market access in key geographic regions.
• Expands position in existing crop segments and accelerates access to additional crops.
• Provides new technology applications, including research and formulation expertise.
• Enhances portfolio with complementary products and technologies
• Accretive to adjusted earnings in the first full year.
• Modifies previously announced separation process  ( Alkali + Lithium to be listed as a separate entity as FMC Minerals) with new plan to divest Alkali Chemicals only.  proceeds used to reduce acquisition-related debt.

source: FMC website

Environment ministry use bureaucratic loophole to ease ban

The Union environment ministry has, using a bureaucratic loophole, lifted a ban on expansion and setting up of factories in eight critically polluted industrial  belts. The moratorium was imposed based on the performance of the clusters on a Comprehensive Environmental Pollution Index (CEPI) developed by the Central Pollution Control Board and introduced by the United Progressive Alliance (UPA) government in 2009. It measures industrial belts on a scale of zero to 100.  A reading above 70 is termed “critically polluted”and a moratorium imposed on expansion. After imposing a round of moratoriums on many industrial belts, the UPA government continued to review improvements undertaken to reduce pollution. Industrial belts that improved with time were periodically taken out of the banned list.

But eight of these showed worsening trends: Ghaziabad (Uttar Pradesh), Panipat (Haryana),

Singrauli (Uttar Pradesh and Madhya Pradesh), Vapi (Gujarat), Indore, (Madhya Pradesh),

Jharsuguda (Odisha), Ludhiana (Punjab) and Patancheru-Ballaram (Andhra Pradesh). InSeptember 2013 the government noted, “The CEPI scores indicate (for the eight clusters) thateven after a period of two-and-a-half years of implementation of action plans, there is noimprovement in the environmental quality.” The moratorium on these eight industrial clusters remained.

With pressure building within the UPA to ease the moratorium, the environment ministry asked the Central Pollution Control Board to review the index itself and come up with another formulation within four months. Now, the NDA government has cited a delay in the review of the index to allow new factories and expansion in the polluted industrial zones on merit, practically doing away with the moratorium.

The government order of June 10 reads, “The report with respect to the entire CEPI concept i.e. taking into account all constituents as originally formulated in 2009, is yet to be received from CPCB. It is felt that re-assessment of CEPI  taking into account all its constituents as originally formulated in 2009 are a must before taking a view on re-imposition of moratorium in any centrally polluted area.”It adds, “It has, therefore, been decided to keep in abeyance until further orders…to the extentnit related to the re-imposition of moratorium in eight centrally polluted areas till CPCB reassessesthe CEPI taking into account all constituents of index as originally envisaged in 2009,” the order further stated.

Till the CEPI index is reviewed, the ministry will consider environment clearance of all the projects in these areas. The environment ministry has asked the CPCB to prepare a report on CEPI index within a year instead now which would permit the government to clear expansion and new industrial activity in these zones till the revised index is decided.

Source- Business  Standard

Monsoons likely to be Critical Factor for the Indian Monetary Policy

The  farm sector accounts for 14 percent of India's nearly $2 trillion economy, with two-thirds of its 1.2 billion population living in rural areas.  Half of India's farmland still lacks access to irrigation & depends on the vagaries of the monsoons.  

Poor rains generally hit summer crops such as rice, soybean, corn and cotton, raising food prices and pressuring economic growth that has nearly halved to below 5 percent in the past two years.  Rains are vital to rejuvenate  the  economy which is  battling its longest economic slowdown since the 1980s and to cool inflation that has averaged nearly 10-11 per cent for the past two years.

The Met Department has predicted  that the  rains will be 95 per cent normal this year and it is likely to revise its estimate later  in end June  according to the movement of the rainfall. If  official rain forecasts come true  then inflation  likely  to fall  below 8 per cent .

The likely fall in inflation, coupled with stability in the rupee and a slight pick up in growth    may lead RBI to be more balanced in its monetary policy making. The RBI has been repeatedly saying it will balance out concerns between the sagging growth and inflation even though it considers reining in the prices as a key objective. The RBI has raised its key rates three times  since  last September but took some growth-oriented measures like the decision to lower the SLR, which is likely to release an additional Rs 40,000 crore  ( $6.5B) for lending.

India's Factory output falls to the lowest level in over 2 years

India’s industrial production dropped an annual 1.9% in February as manufacturing contracted 3.7%, the sharpest drop in 28 months, while exports tumbled 3.2% in March, recording its second straight month of contraction. 

Rating agency Fitch affirmed India’s sovereign rating at “BBB-” with a stable outlook and it  expects the country’s economic growth to accelerate from 4.7% in FY14 to 5.5% this fiscal and 6% next year. Earlier this week, the International Monetary Fund had forecast India’s GDP growth to accelerate from 4.6% in FY14 to 5.4% in FY15 and further to 6.4% in FY16. 

In Q3 of FY14, the trade deficit stood at $28.6 billion against $29.9 billion. The reduction in trade deficit in Q3 suggests further improvement in the (current account deficit)  for  Q4.  If services exports, remittances and investment income remain broadly unchanged in Q4, CAD for fiscal 2014 could fall below 2% of GDP — for the first time since fiscal 2008-09. Exports for all of FY14 stood at $312 billion against the targeted $325 billion but higher than $300 billion in FY13, a growth of 4%. 

Importantly, given the prolonged slump in domestic demand, exports of goods and services as a share of GDP was projected to rise from 22% in FY11 and 24% in FY13 to 24.9% in FY14, as per advance GDP estimate released a few weeks ago. Imports, however, were projected to account for 28.8% of GDP in FY14, down from 30.7% in the previous year. 

As for industrial output, electricity generation grew at its fastest since September last year at 11.5% in February and mining posted a 1.4% expansion. These were, however, not enough to offset a 3.7% contraction in manufacturing, stoked by a demand collapse as the industrial production slumped from 0.8% growth in January. In six of the 11 months to February, industrial production witnessed contraction.

FMC Corporation Announces Separation into Two Independent Public Companies

FMC Corporation Announces Separation into Two Independent Public Companies

New FMC will be comprised of FMC Agricultural Solutions and FMC Health and Nutrition segments FMC Minerals will be comprised of the current FMC Minerals segment, which includes the Alkali Chemicals and Lithium businesses PHILADELPHIA, March 10, 2014 /PRNewswire/ -- FMC Corporation (NYSE: FMC) today announced plans to separate into two independent public companies, "New FMC," which will be comprised of FMC's Agricultural Solutions and Health and Nutrition segments and "FMC Minerals," which will be comprised of FMC's current Minerals segment.  The company expects the separation, which remains subject to final board approval and other customary conditions, will take the form of a tax-free distribution of shares to existing FMC shareholders.  FMC Corporation expects to complete the separation in early 2015, and each company is expected to be listed on the New York Stock Exchange.  Pierre Brondeau, FMC Corporation president, CEO and chairman, said: "FMC has proactively managed its portfolio during the last four years as part of Vision 2015, including a realignment of our reporting segments early last year.  Our decision to separate into two independent companies is a natural progression of our strategy. We believe that creating two companies, each with its own publicly-listed equity, will enable the management of each company to pursue its own strategy. This will give each company greater focus on the success factors that are most important to its business and allow the adoption of a capital structure that is appropriate to its business profile. "The creation of two independent companies will deliver meaningful benefits to each of the businesses, the communities in which we operate and all of our stakeholders. Our customers will continue to have collaborative relationships with financially strong organizations that are focused on meeting their needs, and our employees will have new career opportunities."   New FMC New FMC, comprised of FMC Agricultural Solutions and FMC Health and Nutrition segments, will be a technology-based and customer-driven company with deep application expertise. Based on the midpoint of the company's February 2014 outlook, combined revenue and earnings for the Agricultural Solutions and Health and Nutrition segments are expected to be approximately $3.35 billion, up 16 percent over 2013, and $815 million, up 15 percent over 2013, respectively.  New FMC is expected to maintain a strong balance sheet and financial policies consistent with FMC Corporation's current credit rating.  FMC Agricultural Solutions is a science-based business, serving growers worldwide. Growers look to FMC Agricultural Solutions for innovative crop-protection products developed from science-based innovation, field development, applications expertise and toxicology that, on a crop-by-crop, region-by-region basis, enhance quality and yield. FMC Health and Nutrition develops products from natural sources that provide texture, stability and natural color solutions for food applications, while also producing binders, coatings and high-purity, high-concentration omega-3 for pharmaceutical and nutraceutical applications. Customers rely on FMC Health and Nutrition for its technical excellence, innovative products and collaborative R&D approach. FMC Minerals FMC Minerals will be comprised of the current FMC Minerals segment, which includes the Alkali Chemicals and Lithium businesses. Based on the midpoint of the company's February 2014 outlook, revenue and earnings for the FMC Minerals segment are expected to be approximately $1.0 billion, up 7 percent over 2013, and $153 million, up 19 percent over 2013, respectively. FMC Minerals is expected to generate strong cash flow and have the financial flexibility to pursue select investment opportunities. FMC Minerals will maintain FMC Corporation's disciplined approach to capital deployment and will continue to focus on sustainable, safe and ethical extraction of minerals, process efficiencies, and manufacturing and customer service excellence. Both the Alkali Chemicals and Lithium businesses are structurally-advantaged minerals businesses, with cost-advantaged operations. Both businesses compete in attractive markets.  The Alkali Chemicals business is the largest global producer of natural soda ash, using low-cost technologies to extract trona ore to produce soda ash and related products used in the glass, chemical processing and detergent industries. The Lithium business is the only brine-to-metals producer with a broad global product portfolio, selling into the energy storage, pharmaceuticals, polymers and industrial markets. Underlying market demand for lithium remains strong, driven by growth in energy storage from electric vehicle adoption and other applications. Bank of America Merrill Lynch and Goldman Sachs are acting as financial advisors to FMC Corporation on the proposed transaction and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to the company. source : FMC site

Indian Chemical Industry to grow by 11-12%

The Indian chemicals industry, which earned revenues in the range of US$155-bn to US$160-bn in 2013, is likely to grow at a rate of 11-12% in the next two to three years. Though commodity and bulk chemicals are likely to experience slow growth, owing to reduced industrial output, the specialty chemicals segment should show faster growth.

Sectors such as personal care ingredients & additives,  active pharmaceutical ingredients (APIs), paints & coatings, and construction & water chemicals are some segments likely to perform well. "Even in 2013, these sectors showed good growth and companies in this segment have been investing and expanding.

The specialty chemicals sector is characterized by requirements for high-value products, expanding customer base, and addition of new participants at various levels of the value chain. Overall, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of 13-14%. The sector forms about 15-16% of the total chemical industry, with dyes & pigments, leather chemicals, construction chemicals and personal care ingredients, being important constituents. In terms of production value, the specialty chemicals sector forms about 18-20% of the total chemical production in India. Though increasing regulatory requirements and raw material price fluctuations  have posed challenges for chemical manufacturers, exports have been increasing at a rate of 8-9%. 

CW